Pension Insurance Corporation (PIC), the specialist insurer of defined benefit pension funds, has completed a £1.3 billion pension insurance buy-in deal with the Trustees of the Siemens Benefits Scheme.
The deal marks the third bulk annuity arrangement between PIC and a Siemens-sponsored defined benefit scheme, and PIC said this existing relationship helped the parties swiftly conclude the transaction.
The new agreement will see PIC assume the liabilities of an additional 6000 pensioners, and it has already included the transaction in its £3.2 billion HY 2018 new business volumes.
Aon advised the Trustees during the transaction with legal advice provided by Sackers, while Siemens was advised by KPMG, and PIC by CMS.
Based in Germany, Siemens AG is a global technology company that focuses on electrification, automation, and digitalisation, and is the largest industrial manufacturing company in Europe.
Siemens has around 377,000 employers worldwide, 15,000 of which work for its UK subsidiary, Siemens plc.
Matt Richards, an Actuary at PIC, said: “The Trustee’s decision to enter into a bulk annuity reflects a market wide trend. We are delighted that the Trustees selected PIC as their partner for this transaction, furthering the relationship between Siemens and PIC, which we have been developing over a number of years.
“The bulk annuity market has become increasingly buoyant as de-risking strategies come to fruition, trustees look to protect pension scheme funding levels and companies look to stabilise their balance sheets. At PIC, we take pride in our ability to offer innovative, flexible, structures and I am pleased that we delivered this for the Siemens Benefits Scheme and its members.”
John Smith, Head of Pensions at Siemens plc, also commented: “We are proud of what we have achieved with this latest buy-in, which is part of Siemens’ long-term pension de-risking strategy. This is one of a number of UK DB pension schemes sponsored by Siemens and achieving this is a significant milestone for the company. PIC once again showed a great deal of flexibility and innovation in helping us achieve our aims.”
Joanna Matthews, Chair of Trustees, Siemens Benefits Scheme, added: “We are delighted to have completed this transaction, notable for its speed and efficiency and I would like to thank everyone involved for their hard work in making this happen. This is a great result for all members of the Scheme, reducing overall levels of risk.”
Paul Belok, Partner in Aon’s Risk Settlement Group, said: “We carried out a full market review on behalf of the Trustee, which resulted in the selection of PIC as the preferred provider. We agreed a clear timeline with the Trustee at the start of the process and delivered on this, with efficient implementation and a transaction structure that met the objectives of both the Trustee and the Company. This transaction is further evidence of Aon’s leading position in the risk settlement market.”
Stuart O’Brien, Partner at Sackers, said: “We are really pleased to have assisted the Trustee with this significant transaction in a year that is seeing an unprecedented level of buy-in and buyout activity in the market. The need to work within a very tight project timetable was crucial and the fact that we could secure terms so efficiently is a real testament to the expertise and collaborative approach of all parties.”
Tom Seecharan, Head of KPMG’s Pension Insurance Team, said: “As a large, very well-funded scheme with a history of employing innovative funding and risk control solutions and a blue-chip sponsor, there were many strategies available to control longevity risk. KPMG were pleased to help Siemens in identifying the optimal strategy.”
